MLS is growing and allowing teams to spend more money than ever before. The Sounders have recently spent a lower percentage of overall revenues on player payroll than some other elite teams and could start feeling a squeeze to keep up.
A pair of closely timed announcements by the Sounders demonstrated the Major League Soccer financial-arms race into which they are being pulled.
First, they unveiled new center back Kim Kee-hee from South Korea at CenturyLink Field, their fourth Targeted Allocation Money (TAM) signing since July. Then they announced a first-of-its-kind, multiyear streaming deal with YouTube TV that sees it become the team’s official partner.
The two deals are hardly unrelated: The streaming contract is the latest bid by the Sounders to grow revenue any way they can to sustain the rising cost to remain an elite team in a changing league.
“I want the challenge of a new market,” Kim said through an interpreter. “I see the feasibility of MLS getting bigger and bigger.’’
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MLS is indeed growing and allowing teams to spend more money than ever before. The Sounders have recently spent a lower percentage of overall revenues on player payroll than some other elite teams — most notably, Toronto FC, which outspent them 2 to 1 the past two seasons despite a smaller revenue base — and could start feeling a squeeze to keep up.
Growing the team’s revenue base is a challenge. Attendance seems to be peaking in the low 40,000s per match at CenturyLink Field, and ticket prices can be increased by only so much.
The YouTube TV deal is for less than seven figures annually, though it is part of an overall push by the Sounders to grow revenues incrementally through means other than attendance. Last year, they hired outside consultant WME-IMG to seek a new jersey naming-rights deal that could grow that revenue by at least another $2 million annually once their current Microsoft Xbox contract — worth about $5 million per year — expires after this season.
Teams with better jersey deals include Toronto, New York City FC, the Los Angeles Galaxy and the new free-spending Los Angeles FC expansion franchise. Toronto and New York were 1-2 in league payroll last season, and the Sounders were No. 7.
Payroll hasn’t been as big of a factor in MLS as other pro sports, such as baseball, but the league softening its salary cap again this offseason could signal more of a coming disparity between big spenders and thriftier clubs.
It will be felt most in midrange TAM-level signings of players earning between $504,375 and $1.5 million annually.
They are the exceptions to the league’s rules capping salaries at the $504,375 mark. In December, the league announced that — in addition to the $1.2 million it gives each club for yearly TAM signings — teams can spend an additional $2.8 million annually of their money on such players in 2018 and 2019.
That has caused some teams to go on spending sprees, as others with fewer financial resources hold back. Toronto this week added midfielder Ager Aketxe from Athletic Bilbao in Spain’s La Liga for TAM funds, having previously signed Dutch right back Gregory van der Wiel and Brazilian fullback Auro for an already loaded roster.
The Sounders added TAM midfielder Magnus Wolff Eikrem in January after signing midfielder Victor Rodriguez and right back Kelvin Leerdam in July.
Now they have signed Kim as insurance against the bad hamstring of center back Roman Torres. And general manager Garth Lagerwey said he’ll seek a “No. 9” attacking forward for Designated Player (DP) or TAM funds to replace injured striker Jordan Morris.
Up to three DPs per team can be paid unlimited money.
“We view these decisions as three- to five-year decisions,” Lagerwey said of DP and TAM signings. “Not just short term.”
And indeed, the team views any revenue gains in the longer term as well. Though they might ultimately need to spend a higher percentage of those revenues, for now every bit helps so teams don’t start pulling away.